(THE COLLEGE FIX) -- Five economics professors from Hillsdale College are claiming the best way to fight the recent shortages of consumer goods is to let the prices rise on high-demand items, arguing that to do so is constitutive of the “common good.”
In a letter the academics published in The Detroit News, they explained that Michigan’s attorney general, who recently warned companies not to “price gouge” during the coronavirus panic-buying, “is worsening shortages by threatening businesses that raise prices more than a modest amount.”
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“One on one, it’s indeed wrong to take advantage of someone’s desperation to drive a hard bargain. In an open market with competition, though, a shortage is telling us that the price needs to be higher for the common good. Higher prices would induce people to cut back panic buying and leave enough on the shelf for others. Businesses would shift into even higher gear to produce scarce goods,” the professors argue.